SALARY TAXED IN USA – WHETHER TAXABLE IN INDIA?

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SALARY TAXED IN USA – WHETHER TAXABLE IN INDIA?

SALARY TAXED IN USA

Query 1]

I am a retired officer of state bank of India. My queries are as under –

  1. I have 3 R.D. A/c’s and a fixed Deposit for 2 years with post office at Chhindwara. Whether the interest earned on them are taxable? Whether investment in R.D. Account is eligible for deduction u/s 80C?

  2. I have saving bank A/c’s with SBI & ICICI bank. Whether the interest earned on these accounts are taxable?

  3. I have also Demat A/c with ICICI bank Chhindwara. I occasionally buy and sale shares of Cos. through this A/C whether income earned and dividends received against them are taxable
    Kindly guide me [H.S. Sahu]

Opinion:

  1. Interest on R.D. Account with post office is taxable under the head “Income from other sources”. No deduction u/s 80C is available towards Investment in R.D. A/c. of post office.
  2. Interest on saving bank account is also taxable under the head “Income from other sources”.
  3. Income on sale / purchase of shares shall be taxable under the head “Income from Capital gain” if the shares are sold within 12 months of its purchase. Shares sold after holding it for a period of more than 12 months shall be exempt u/s 10(38). Dividend earned on shares of a company is exempt u/s 10(34).

Query 2]       

My son was in USA for some period and came back before completion of six months of job. He was getting salary in US Dollar on which tax was deducted by the US Government. The balance amount is brought back to India. Please clarify, with relevant sections, whether income tax is payable on this amount in India? [vdpankey@yahoo.co.in]

Opinion:

  1. As per section 5 of the I.T. Act-1961, incidence of tax on a taxpayer depends on his residential status and also on the place and time of accrual or receipt of income. In respect of salary income, it shall be taxable in India only if it is received by “Resident”
  2. An individual shall be considered a Resident of India if he fulfills any one of the following conditions:
    A] Condition 1
    – He should be in India for 182 days or more during the relevant previous year.
    OR
    B] Condition 2
    – He should be in India for 60 days or more during the during the relevant previous year AND
    – He should be in India for 365 days or more in 4 years immediately preceding the relevant previous year.
    Exceptions: (i) An Indian Citizen leaves India during the previous year as a crew member of a ship or for the purpose of employment outside India. (ii) An Indian Citizen or a Person of Indian Origin visits India during the previous year,
    in which case he shall be a Resident of India only if he is in India for 182 days or more.
  3. If the income of your son is taxable in India as a result of residential status, then he can claim relief u/s 90 of the I.T. Act-1961 in respect of tax paid in USA.

 

Query 3]

Our case for A.Y. 2007-08 was selected for scrutiny, & the Assessment order is passed by the Income Tax Officer by making certain additions in the Scrap sales on ad-hoc basis and also by disallowing traveling, Mobile and Office expenditure as personal expenditure. We have paid the taxes as a result. But, we have received another notice for penalty u/s 271(1)(c). Please elaborate about the penalty u/s 271(1)(c)? Whether that is applicable in our case?  [KGC]

Opinion:

  1. Under the provision of Income Tax Act-1961, there are number of sections prescribing for imposition of penalty for non compliance with the provision of the Act. Section 271 (1) (c) lays down provision for penalty where there is concealment of income or inaccurate particulars of income are furnished. The section provides that if the assessing officer / CIT / CIT (A) in the course of any proceeding under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty in addition to tax, if any payable by him, a sum which shall not be less than but which shall not exceed three times the amount of tax sought to be evaded by reason of particulars of his income or furnishing of inaccurate particulars of such income.
  2. It has been held in Union of India Vs. Rajasthan Spg.& wvg. Mills (2009) 180 Taxman 609 that mere non payment or short payent of tax would inevitably lead to imposition of penalty.
  3. No penalty is leviable u/s 271 (1)(c) if
    a) it is determined on estimate basis or
    b) without bringing any material on record which would substantiate that there was failure on assessee’s part to return correct income due to fraud or willful neglect or furnishing inaccurate particulars of income or
    c) without any evidence to show that the assessee has willfully concealed income.
  4. The following citations may be relie upon:
    i) CIT Vs. Sangrur Vanaspati Mills Ltd (2008) 303 ITR 53 (P & H)
    ii) CIT Vs. Iqbal Singh & Co. (2009) 180 Taxman 355 (P & H)
    iii) Sri Bhagwan Prasad Vs. Asstt. CIT (2008) 20 (II) ITCL 383 (Ranchi-Trib).

SALARY TAXED IN USA


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